Telecom executives typically give rural phone service short shrift, unless they are trying to get a deal past regulators at which point expanding service to the underserved in America’s countryside becomes a top priority.

On Tuesday, AT&T Inc. CEO Randall Stephenson will argue at a House Judiciary Committee hearing that its proposed $49 billion takeover of DirecTV will bring broadband options to at least 13 million people who currently have limited or no access to the service in rural areas.

“This represents a multi-billion dollar commitment of capital that AT&T simply could not make without the ability to pair DirecTV’s video products and scale with our newly-expanded broadband services,” according to Mr. Stephenson’s prepared remarks as posted on the House’s web site.

This argument is tailored to address long-standing concerns from lawmakers and regulators about poor connections and speeds in rural areas. Back in the days of the original Ma Bell, the phone company was allowed to operate as a monopoly in exchange for providing universal service. While rural areas have phones, they often don’t have the ability to get high-speed internet or high quality wireless coverage and the cost of connecting them can make it a low priority for service providers.

AT&T touted the ability to reach more rural customers when it made its unsuccessful case to buy T-Mobile back in 2011. At that time, the carrier committed to covering virtually all Americans with high-speed wireless technology called LTE and promoted the benefit to rural areas. That promise didn’t outweigh the antitrust concerns that ended up blocking the deal.

Even in defeat, AT&T built out the promised LTE coverage. AT&T said it was able to build out the LTE network by using spectrum that became available later.

AT&T isn’t alone in using rural investment to win over Washington. Sprint Corp. has been stepping up its rural reach as Chairman Masayoshi Son seeks to smooth the path for a merger with T-Mobile USA Inc.

AT&T says the DirecTV deal will allow it to set up so-called “fixed wireless” connections for the 13 million rural households.

The company says it will provide speeds of 15 megabits to 20 megabits per second. That compares with fiber optic connections AT&T is rolling out in a handful of communities that will have speeds of a gigabit, or more than 50 times the speed of the fixed wireless option AT&T will offer rural customers. (Under the deal, AT&T will expand this service as well.)

If the deal goes ahead, however, it’s unclear how much of an improvement the fixed wireless technology will be. In its application with Federal Communications Commission for the DirecTV deal, AT&T said the transaction makes investing in the technology more feasible, but noted that the service is “relatively untested technology” and “its success in the marketplace is thus unproven.”

that means it will just be like hughes net and excede and for $120 you only get 25 gigs of high speed data and then they either slow you down or start overcharging you

11:37 pm June 23, 2014

Anonymous wrote:

the joke of the whole at&t ploy is that they seem to be in the opening stage of selling wireline property, especially rural footprints where big ARPU is hard to come by...selling Connecticut is the opening salvo in shedding wireline operations...watch for their smaller wireline states to follow. they have no intent to deliver more services away from the data-intensive big-dollar, big cities.

6:26 pm June 23, 2014

Smalls wrote:

There Will Be Broadband: Forgotten by the Future, Some Take the Internet Into Their Own Hands

Search it. Same old song of the conglomerates. Power companies were the same way but cooperatives and municipalities still find a way to make it profitable......hmmmm 35 publicly owned ISP of 1gb already operate in U.S. but Stephenson can't find a way to make fiber deployment profitable or at least break even? Maybe he should consider the bundle pay TV potential on a break even internet service? Same old games from monopolistic telecoms and power providers. U.S. congressional leaders should look at banning states from such monopolistic restrictions. If over 2,000 communities in the U.S. can safely provide their own electric service then they should have the window for communications available....

6:06 pm June 23, 2014

Smalls wrote:

Just a ruse to attempt to gain approval. Short term financial engineering on a poor strategic move by AT&T. Satellite is a mature and soon to be fading technology as the masses begin a move to streaming video through high speed (talking 500mbps-1 gbps, not the 20 or less mbps) internet which allows for on demand content. How does DTV purchase make slow internet investment more feasible? Short term financial engineering? Build the fiber network (fiber backbone w/ "g.fast" being prepared for EU launch is possible) and then we have a different ball game. This promise of increased DSL like speeds to more rural customers is hog wash. Build it in your market AT&T or competition will build it. Reference a group of farmers in rural U.K. who have built their own fiber network with very reasonable rates or the group in North Dakota or even the likes of Google will come knocking "Why Wait For Google Fiber? UK Farmers Want Faster Internet, Build Their Own". If UK farmers can complete a roll out of fiber for $1,500 install cost and make the deal float for $45/mo then it shouldn't be any different in the U.S. The quagmire is a mass fiber network with WiFi service will cannibalize LTE network investment. Whatsapp or Magic Jack etc have super cheap phone and text service. What will that do to large carrier revenues and profits with a comprehensive fiber/wifi network across the nation? T dragging their feet will just bring in competition threat like GOOG is already doing. The North Dakota fiber build was 10,000 square miles (i.e. 100X100) serving something like 16 or 18,000 customers. If they can profitably install fiber in a rural setting for reasonable cost then T could as well. It shouldn't take a merger approval to bait T into deploying fiber let alone an inferior 10mbps DSL system. I say deny the merger and competition/demands will eventually push them into deploying. GOOG has been goosing T into fiber just on the back of competitive threat. Instead of spending nearly $68B (need to include existing debt to be assumed), T could spend the same cash and debt financing to deploy fiber in many unserved and underserved ISP markets. "G.fast" technology being developed in EU received standardization in April with OEMs in development with commercialization possible in first half 2015 by some reports. This tech uses final leg copper vectoring coupled into a fiber backbone. A node box near the home/apartment/business using the tech may reduce install costs 80-90%. This commercialization in EU and eventual move across the pond will make for a much more cost effective install of high speed internet (500mbps-1gbps). Whoever owns the final leg copper will have the advantage for cost of truly high speed ISP. An all new fiber to the home service won't be able to compete with cost of a fiber backbone/g.fast system at 20% of cost.

Comcast/Time Warner has very little antitrust concern given respective markets but is a defensive position given fiber and fiber like speed ISP coming down the road is a threat to both satellite and cable pay TV as well as cable's internet service.

T just using very low hanging fruit as a teaser for approval. Government should pin T down to a mass fiber rollout to rural customers with minimum percentage coverage by a certain deadline or face government fines. This all doesn't matter because antitrust is a big issue with DTV deal. AT&T's u-verse TV operates within 25% of DTV's national market. You are reducing competition within Pay TV market with this deal. Your pipes are DISH, DTV, cable (not available in rural settings), and ISP bundle TV which is usually advantage to the ISP provider. You cut competition from 4 to 3 and in some markets from 3 to 2. I recall an AT&T bid for T-Mobile that was blocked on such a reduction.

Here is the real reason....DISH is moving to an online bundle. AT&T has a U-verse TV bundle which is going to come under pressure from an ever increasing amount of online bundlers with a bunch already in the field. DTV needs to move to a web based bundle but this puts it in direct competition to U-verse TV when they have enjoyed 3rd party cross selling to this point. Quagmire for DTV/U-verse TV. NFL Sunday Ticket is a loss leader for DTV which creates a differentiation product because it is an exclusive contract. Without a differentiation product you will see immense competitive pressure because the moat to become a web based pay TV bundler isn't very deep or wide. T knows NFL contract is key and why the put it as a deal breaker in the contract.....silly part being the last contract was only four years in length. Why spend near $68B for a company that could lose the contract on a periodic basis of just a few years? Satellite is a fading technology and many in the industry are shaking their head at why T is buying a fading tech. The only reason is Stephenson will avoid a head-to-head conflict with a long time DTV partner, aid in fortifying a web based pay TV position, and grab some short term cash flow benefit....although the financial engineering is very short sighted as DTV is national and U-verse is regional land line service in only 21 states now. Other high speed ISPs will take DTV profits in the long term as Ergen has stated streaming video is the long term trend.....as he is set to launch the web based product by end of 2014.